US opens multi-billion dollar renewable energy treasure chest

The US Treasury and Department of Energy formally launched a flagship renewable energy funding programme on Friday, announcing that project developers could now apply for direct payments from a new fund worth over $3bn (£1.8bn).

Under the scheme - which is expected to see funds distributed to around 5,000 biomass, solar, wind and other types of renewable energy projects - firms can agree to forgo existing tax credits in return for a direct payment from the government.

Treasury secretary Timothy Geithner said that the new funds, which are being made available from the US government's economic stimulus package, would help kick-start those capital-intensive renewable energy projects that have "stalled due to a lack of financing".

His comments were echoed by energy secretary Steven Chu, who predicted that the government investment would "play a major role in encouraging private sector capital to invest in clean energy development".

The launch of the scheme came just days after the Department of Energy announces that it would provide up to $30bn in loan guarantees to renewable energy projects as well as a further $750m in loan guarantees for grid upgrade projects. Applications for the loan guarantees will now be accepted for 45 days.

Meanwhile, the department last week also awarded $11m in new grants to five research projects focused on integrating solar energy systems with the grid.

The latest flurry of funding initiatives in Washington further underlines the sense that the US renewable energy industry is accelerating rapidly towards mainstream acceptance. This follows new figures released last week by the release of new figures from the American Wind Energy Association (AWEA) showing that the sector added 1,210MW of capacity during the second quarter of the year.

The association said that the performance meant that the industry has installed more than 4,000MW so far during 2009, marking a significant improvement on the 2,900MW installed during the first half of last year.

AWEA chief executive Denise Bode said that the figures showed impressive progress, but she argued that the sector could be expanding faster still and reiterated calls to the Obama administration to set a nationwide target for renewable energy use similar to the renewable energy standards imposed by a number of State governments.